Following a sharp rejection last week, Polkadot dropped and resumed selling this week but has remained calm in the past hours due to an extreme drop in volatility. We can expect a big drop if an expansion occurs.
During the last short-term bullish rally, Polkadot formed an “inverse head and shoulder” – H&S pattern and broke out massively to a 17-month high within two weeks.
It lost momentum for three weeks and later found support above $6.5 earlier this month. A recovery from that level brought the price back to around $8.5 before facing a rejection last week. The price fell back and looks calm at around $7.4 with a classical H&S pattern.
This pattern indicates a bearish formation, which is capable of slipping the price back to where it broke out in late 2023. As we can see on the daily chart, the price is facing downward while brewing a big drop.
The monthly support is a crucial level to watch for a breakdown. If the support holds and produces a rebound, we can expect the price to climb back. As of now, the bears are in control with more surges lying ahead.
DOT’s Key Levels To Watch
As DOT prepares for a drawdown, the $7 and $6.5 levels are the key support levels to keep in mind for a drop. A crackdown from there could send the price to $6 – testing the neckline of the inverse H&S pattern that broke during the last bullish rally. It may even slip to $5.5 and $5.
If DOT finds support above the mentioned key support levels, it may bounce back to retake the immediate resistance of $7.85 before testing $8.58. The higher level to watch is $9, followed by $9.59 – where it initiated drops in December.
Key Resistance Levels: $7.85, $8.58, $9
Key Support Levels: $7, $6.5, $6
- Spot Price: $7.4
- Trend: Bearish
- Volatility: Low
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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